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Tuesday, 22 December 2015

A few macro thoughts today

A few macro thoughts today...

Europe as viewed from Italy – reacting to the Spanish
vote Matteo Renzi observed in an interview with the FT: ‘I know that those who
have been in the front line of being the faithful allies of the politics of
rigour without growth have lost their jobs…we have to be frank: Europe has to
serve all 28 countries, not just one’. A not unsubtle nudge to Germany!

UK property ‘crisis’ & confidence levels – RICS
predict that the average UK house price will increase by 6% in 2016 BUT this
driven by a sharp fall in inventory. They note ‘the words housing and
crisis have rarely appeared so inseparable’. Meanwhile UK GfK Consumer
Confidence in Dec came in at 2 (exp 1 prev 1) “This is the first time since the Consumer
Confidence Barometer started in 1974 that the Index has remained positive for
an entire calendar year”. A surprising statistic! Not sure if it
can persist with a property crisis into 2016 however.

Asia – more stimulus coming in China later this month
as this year policy eased on 4 Feb, 20 April, 28 June, 26 August, 24
October. So every even month is a policy easing month?! (h/t @simonting for this observation). Certainly
the noises coming out of the Xinhua news agency re ‘accommodative’ fiscal and
monetary policy would be consistent with this.

Global FX – as @fastFT notes 'the US dollar is on track to have its biggest decline in
eight months.

The dollar index, which gauges the currency against global
rivals, has sunk 1.8 per cent this month, through Monday. That would be its
biggest monthly drop since April, when it fell 3.8 per cent'.

And just to show that the US$ really does matter:

(h/t @eurofaultlines)

Global M&A – high volumes but multiples not quite
as high as pre the financial crisis

And finally - How much oil is needed to power Santa's
sleigh? “With jet fuel going for around $1.20 a gallon right now, this puts the
total fuel cost of Santa's journey at a bit less than $54 million for one night
despite prices being near historically lows”. The maths for this
important analysis here (h/t @sophia_yan)